What are Smart Contracts?
Smart contracts are nothing but deals that are digitally stored using digitization to enable digitalization of the business process. The smart contracts can be touted as one of the best applications of blockchain. Blockchain eliminates the middlemen in whichever industry the technology is leveraged, and smart contracts do the same. One doesn’t have to rely on a third-party player to authenticate the deal but pay some money to build the code which is suitable for all the parties involved and deploy the contract in the blockchain to make it active.
How do they work?
Smart contracts in real is a piece of code which can be written in any language that the blockchain platform may support. The code is written in such a way that when predefined parameters are met, the contract execution triggers automatically, and the conditions are met without any human intervention. This makes it very easy to handle and execute smart contracts.
Are they reliable?
Immutability is one of the essential characteristics of blockchain, as we have seen in our previous articles. Since the blockchain works on the concept of distributed ledgers, a copy of the contract will be available with every party involved. Smart contracts deployed in the blockchain network are immutable; once used, they cannot be changed. All the predefined terms should be met as agreed and signed by all the involved parties. Payments, if any concerned, will be done automatically as well without any human involvement. Thus, not delaying the cash, which makes all the parties happy about the work done. Hence the smart contracts are considered very reliable.
The real-life example of Smart Contracts
There are infinite real-life scenarios where smart contracts can be used. We all have booked tickets for our most awaited events, say concerts, movies, sports and so on. We always use a third-party website/app to book the tickets. Here the audience, as well as the event organizers, are trusting this third-party service provider with their money.
Instead of a third-party service provider, if one can deploy smart contracts in these scenarios, it would be easy to manage money. People buy their passes for the event, and this money is stored in the escrow linked to the contract. The money is not credited to the event organizers’ account unless the event is completed. If the event is completed, the funds will be automatically transferred to the organizers of the game. If not, the amount will be refunded to the audience account as per the terms and conditions of the event.
In this case, we do not depend on a third party for the refund of the amount, which may delay in case of any eventualities. We are also not paying any other extra fee to book the ticket as no third party is involved—this the best real-life example where once can use smart contracts.
The new technologies in our lives have come to make our life easy, and smart contracts come under such a category. We not only save money using them but also get rid of concept terminology of terms and conditions which lawyers use to cash the loopholes when something goes wrong. In this case, we use straightforward language to code the words and get them triggered as required, thus making them comfortable and very reliable to use.